Emergency Fund

Thatsthespirit

I've created an emergency fund (approx. 4-5 month worth of outgoings). However, having that lump sum sat in the bank account... doesn't it lose value sat there?

caeler

Why don't you move it into an account that pays some interest?  Not many options available but there are some limited withdrawal accounts that offer something.  

muffinek

Posted the same question few months ago. In the end I put all into Premium Bonds leaving some small amount in easy access account. 

In the first draw I won equivalent of 0.6% whilst it is not life changing much better than most of options out there suitable for emergency fund. 

I've heard some comments against PB as sometimes it may take a while to get the money into the account hence I left some in the current saving account just in case. 

colsten

muffinek said:

Posted the same question few months ago. In the end I put all into Premium Bonds leaving some small amount in easy access account. 

In the first draw I won equivalent of 0.6% whilst it is not life changing much better than most of options out there suitable for emergency fund. 

I've heard some comments against PB as sometimes it may take a while to get the money into the account hence I left some in the current saving account just in case. 

Those comments about delays in withdrawing from NS&I are generally from people who don't do the withdrawals themselves online, or who have forgotten some of the credentials they set up at the time of registering for online access. Without those self-imposed hurdles, withdrawals are normally in the nominated current account within a working day.

OP, you can find a comprehensive list of savings rates are on https://moneyfacts.co.uk/. There are also some Regular Savers which allow penalty-free withdrawals https://forums.moneysavingexpert.com/discussion/6106986/regular-savings-accounts-the-best-currently-available-list/p1

jay1804

Thatsthespirit said:

I've created an emergency fund (approx. 4-5 month worth of outgoings). However, having that lump sum sat in the bank account... doesn't it lose value sat there?

It does lose value however, if you didn't have the emergency fund and you had a huge bill,  how would you fund it? Overdraft, credit card, loans, removing money from investments. Doing any of them could cost you between 0 - ****.99 % . The emergency fund isn't there to make you money, it's there to save you money and stress. If you feel comfortable with your job, boiler, car, roof, etc. Then you could consider decreasing the emergency fund and or use an offset mortgage, if you still have one.

Malthusian

What Jay1804 said. The return on your emergency fund is the interest you aren't paying on credit cards, loans and overdrafts.

What is your pension / retirement fund invested in? If you're worried that you're not getting enough of a return on your money, your emergency fund is the wrong place to look.

Linton

A key return on the emergency fund, inexpressible in £ terms, is the reduction in stress.  No matter what happens, barring the end of the world as we know it, you will be able to cope for long enough to resolve the situation.  That is worth the cost of 2% a year.